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Sector ties Wyoming with Pacific coast

Editor’s note: This is the fourth in a weeklong series of articles on the local and regional energy sector entitled “Big Bang: The boom and bust energy industry.”

SHERIDAN — It’s a long way from Sheridan to the Pacific coast, but geographic distance doesn’t diminish the city’s stake in a battle currently playing out on the shores of Washington and Oregon.

The effort to construct several high-capacity shipping ports for the purpose of transporting dry bulk commodities — coal prime among them — to rapidly developing Asian markets has steadily heated up in recent months amid concerns about potential economic and environmental effects.

The questions raised by members of both the public and private sectors have prompted a national conversation on how best to balance the economic needs of the American West with the overall health of the natural environment.

And while Wyoming lawmakers have largely forged ahead in their efforts to increase the region’s energy exports, some remain unconvinced that a heightened emphasis on coal shipments is entirely a good idea.

Some, like Montana rancher Walter Archer, worry new rail infrastructure will crowd out private landowners and place an unnecessary burden on those who rely on the land to make their living.

“There are costs to this,” Archer recently told The Sheridan Press. “It isn’t all roses, and we need to make people aware of that.”

Meanwhile in Sheridan County, resident concerns center largely on issues of infrastructure and job creation.

About 30 trains currently pass through the city each day, delaying traffic at several busy thoroughfares as long lines of rail cars filled with recently excavated coal head west toward existing coastal ports.

And while already a frustrating state of affairs for commuters, the situation is likely to get even worse if any of several proposed ports become a reality.

In 10 years time, the number of trains passing through Sheridan could more than double, according to a recent study commissioned by economic development group Forward Sheridan.

And whether or not that actually happens, planners in Sheridan and throughout the western United States say the time to prepare for the export-driven economy of the future is now.

Local rail impacts

While likely an economic boon, a future marked by increased rail traffic through Sheridan could come with a serious price.

Increased traffic congestion could lead to decreased productivity for area businesses and a general decrease in quality of life for residents.

Currently, between 17 and 25 percent of all traffic through the First Street and Fifth Street corridors experience a train-related delay in travel times. According to figures compiled in the Forward Sheridan study, however, that number could grow to between 40 and 50 percent if its 10-year predictions prove accurate.

Recently, those concerns prompted officials at Forward Sheridan to consider the potential for rerouting the local rail tracks — an entity owned and operated by BNSF Railway — around city limits rather than directly through them.
According to figures compiled in the organization’s recent study, the construction of a rerouted railroad would likely cost between $140 million and $169 million.

While hardly an inexpensive endeavor, planners say the move might prove worthwhile if new West Coast shipping infrastructure becomes a reality.

If that happens, local officials say Sheridan will need to be prepared.

“I think the groundwork we’ve set on the bypass is really a good, solid foundation,” Forward Sheridan executive director Jay Stender said.

The 2012 Forward Sheridan study was conducted by Colorado-based transportation planning firm Felsburg Holt and Ullevig with assistance from Vista West Engineering and BBC Research and Consulting.

While highly contingent on a number of factors, increased energy exports could prove to benefit the Sheridan economy in a number of ways.

Among the study’s more notable findings: A rerouted railroad could result in total direct and indirect labor earnings of more than $66 million for area residents.

The study also suggests that existing railroad property in Sheridan could be used for a light manufacturing facility that supports 50 jobs with a direct annual output of about $7.4 million.

Through a process that took into account numerous factors that might stand in the way of a potential reroute, the study’s authors ultimately identified four routes that might prove economically, environmentally and logistically possible.

And while any potential reroute is still years down the line, Stender said it’s important to engage the local community now, saying the demand for Powder River Basin coal is set to increase rapidly and that Sheridan needs to be ready.

According to a 2011 study of Powder River Basin coal resources conducted by the geological consulting firm John T. Boyd Company, total production in the region is expected to grow from its current level of roughly 485 million tons to more than 685 million tons by 2040.

As for the potential economic effects of that growth, Stender likened the importance of improving the area’s transportation infrastructure to the 19th Century effort to traverse the country by rail.

“It was Lincoln who said, ‘This is necessary for America,’” Stender said. “Ours is not that glorious, but it’s an element of that.”

Battle for the Ports

While several proposed large-scale port projects are already in the works, few could have greater impact on the Sheridan area than the Gateway Pacific Terminal in Whatcom County, Wash.

Once fully constructed, planners anticipate the facility will be capable of handling 54 million metric tons of commodities per year. What’s more, BNSF Railway has exclusive transport access to the project while Cloud Peak Energy and Peabody Energy — both producers of Powder River Basin Coal — have already signed on to utilize the terminal.

Senior project consultant Craig Cole said a fully operational Gateway Pacific Terminal stands to benefit all of the United States by generating much-needed economic activity and providing the ability for Wyoming and Montana coal producers to meet demand from rapidly urbanizing Asian nations.

“We have significant and stubborn trade imbalances, so anything we can do to create infrastructure that facilitates more competitive U.S. trade is helpful,” he said.

That significance is heightened by the tenuous nature of the coal market in the United States. New environmental regulations teamed with a mounting public hostility toward coal have given many industry experts reason to believe that exports are a necessary component of the future of American coal.

While demand for future coal is expected to be sluggish domestically, the U.S. Energy Information Administration projects that world coal consumption will increase at an average rate of 1.5 percent per year between 2008 and 2035.

Much of that growth is expected to occur in emerging Asian countries that are eager to take advantage of inexpensive coal-fired power.

Proponents of the new West Coast ports argue that those countries will build their economies on coal regardless of whether they obtain it from the United States, Australia or anywhere else.

They assert that the United States, as a matter of policy, ought to take advantage of that inevitability by supplying those markets with abundant and relatively clean-burning American coal.

When compared to coal from other areas, Powder River Basin coal is inexpensive to mine, abundant and relatively clean burning.

“Because of technological developments, the United States — if we’re smart — can be an energy exporting nation,” said Speaker of the Wyoming House of Representatives Tom Lubnau, R – Gillette.

But some locals fear that the development of new coal exporting infrastructure stands to threaten not only the natural environment, but also the ability of certain population segments to earn their living.

Rancher Walter Archer is also the Chairman of the Northern Plains Resource Council — a Montana organization that works to promote environmental stewardship and the rights of farmers and ranchers.

For his part, Archer feels as though he and his colleagues have been largely ignored in the conversations surrounding coal exports.

“I just think there are tremendous effects from (building new rail infrastructure) that we need to be completely aware of and determine whether it’s worth it,” he said. “Myself, I don’t think it is.”

Local lawmakers, however, appear bullish on their efforts to increase the region’s ability to mine and export coal.

Currently, the Gateway Pacific Project is undergoing an environmental impact study process that could take up to two years to complete. Cole estimates that construction of the facility could take an additional two years.
Elsewhere, other port projects is also trudging along.

Australia-based Ambre Energy recently received draft permits from the Oregon Department of Environmental Quality regulating coal dust at the Coyote Island Terminal LLC at the Port of Morrow in Boardman, Ore.

Additionally, earlier this year the Sheridan City Council confirmed its support for the Alliance for Northwest Jobs and Exports — a consortium of organizations lobbying for the development of new port infrastructure.

And while the fight for the ports is far from finished, development advocates from across the region believe momentum is on their side.

About

Paolo Cisneros

Paolo Cisneros joined The Sheridan Press staff in August 2012. He covers business, energy and public safety. A Chicago native, he graduated with a bachelor's degree in journalism from the University of Illinois at Urbana-Champaign in 2011.

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